A leading KwaZulu-Natal politician and influential businessman allegedly "misappropriated" more than R1,3-million from a black economic empowerment trust, according to documents before the Durban High Court this week.
The shocking allegations against IFP MP Mandla Msomi - who chaired The Empowerment Trust set up to bring information technology skills to previously disadvantaged communities - were made by Jim Miller, chief executive of DSE Technologies.
DSE is an information technology company which develops security systems for the gaming industry and is owned jointly by the trust and SMG Holdings Limited, a company owned by a Malaysian tycoon "Dato" AH Samsudin.
Msomi, an member of the national assembly and the former chairman of its public enterprises portfolio committee, returned to South African on Friday after a trip to Ethiopia.
He said he was "recovering from the shock that the people who are doing this to me are my friends".
"Jealousy and greed are the only conclusions that I can come to," he said. "Delicate business negotiations that I am engaged in now are going to be prejudiced and potential investors frightened off."
On Thursday, Miller brought an application before Judge Phillip Levinsohn for The Empowerment Trust to be sequestrated and placed under the control of an independent trustee. A provisional order was granted and a return date - on which Msomi will have the opportunity to oppose the application - set down for January 18 next year.
In an affidavit, Miller said the trust had been operating at a loss since its inception and would have been "forced to close its doors some time ago" were it not for loans from DSE and credit supplied by Wireless Courier Services.
The "large amount" drawn by Msomi and fellow trustees "appears to have been one of the reasons for... its parlous financial position," Miller said.
Miller also claimed Msomi had "purported" to borrow R1,3-million from SMG on behalf of the trust which was then "supposedly" lent to DSE.
"The trust did not onward lend any monies to (DSE) and there is no record in the books of account of the trust as to what happened to the amount of R1,3-million," Miller added.
"SMG Holdings Limited are holding (DSE) liable for the repayment of this amount. The entire transaction cries out for full investigation by an independent trustee in order to recover the amount of R1,3-million for the benefit of the creditors of the Trust."
He added that a forensic audit report conducted by Gobodo Incorporated had revealed the "overwhelming probability that monies have been misappropriated from the trust" and that Msomi was "implicated in the misappropriation of monies".
Miller said the business affairs of the trust - which is also being sued for R1,4-million by Wireless Courier Services (a supplier of prepaid telephone cards) - reflected a "sorry picture of mismanagement and the likely misappropriation of monies."
He argued that if a trustee were appointed to investigate the trust's affairs, this would "result in the trustee being able to recover the monies which have been misappropriated from the trust".
Miller also argued that an agreement between Msomi and his fellow trustees made on November 25 in which Msomi would purchase all assets and liabilities of The Empowerment Trust in his personal capacity was "valueless".
"From my own personal knowledge of (Msomi), he does not appear to have the financial resources necessary to implement such and agreement," Miller said.
"The so-called agreement is nothing more than a thinly-disguised, cynical ploy to avoid sequestration and a full investigation into the affairs of the trust."
The audit report by Gobodo found that withdrawal slips for an additional R87 000 which could not be traced appeared to have been signed by Msomi.
It added it was also investigating the issuing of two cheques amounting to R100 000 from accounts to which Msomi was a signatory.
Msomi vowed to ensure that the matter was thrown out of court and that he was likely to institute action to clear his name and secure damages from his accuser.